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Federal District | The Princes of Payola

José Roberto Arruda

Source: Terra Brasil

A federal district court today found district legislator Benedito Augusto Domingos (PP) guilty of administrative improprieties. Domingos will have to return R$ 30 million to the public treasury based on  his participation in the so-called “payola of the DEM,” a scheme uncovered by the federal police operation Pandora’s Box in 2009.

The sums are equivalent to those seen in the “big payola of the Workers’ Party” and “the payola of the PSDB” cases, which also involve an alleged payout of graft to allied candidates.

“Big payola” is the translation provided by the State Department official keeping track of the story. I like it, so I borrowed it.

At any rate, today’s events show how dead wrong the  Wilson Center is when it describes the “big payola” as

… a scheme set up by the administration of President Luiz Inacio Lula da Silva (2003-2010) to buy votes in Congress by paying representatives a monthly stipend.

Both Arruda and the ex-president of the PSDB were driven from office for exactly the same type of alleged misconduct, but have yet to come to trial, for some reason.

After all, the facts in the PSDB case predate those in the PT case by several years, and both organizations used the exact same cash-in-the-socks front-man technique run by the same cast of unsavory characters.

In the case of the PT payola, especially, many of the accused accomplices  of the scheme also allegedly operated the PSDB payola scheme, 1998—2001.  

The judge ordered Domingos to reimburse assets obtained in an irregular manner, amounting to R$ 6,979,668, with monthly payments of R$ 30,000 from January to September 2009 and R$ 6 million in political support paid to José Roberto Arruda (ex-DEM), corrected for current rates and with the assignment of post-maturity penalties.

  • Public Ministry recommends that STJ accept charges against defendants in the Pandora case.
  • STJ assigns cases to separate proceedings; Arruda will face a court of the first instance.

In the Brazilian system, sitting elected officials may only be tried criminally in the Supreme Court.

In the PT Payola case, more than 30 defendants had to make common cause in the proceeding, whereas in the PSDB case there are strong indications the cases will be severed and heard by courts of the first instance — a big advantage over defendants whose case cannot be appealed because it was heard by the — normally constitutional —  Supreme Court.

​Domingos was also ordered to pay a fine equivalent to three times the sum illegally received, totaling R$ 20,939,004, with interest and monetary correction based on the current case.

The legislator will also pay R$ 900,000 into a fund especially created for the refund, in the Federal District.

Domingo also had his political rights suspended for 10 years and barred from occupying public office during the same period. He will also not be allowed to enter into contracts with the government or receive financial incentives or benefits, directly or indirectly, not even as a partner in a corporation. Domingos will also be required to pay the legal costs of the case.

The “payola of the DEM”


The so-called “payola of the DEM,” videos of which were published in late 2009, resulted from federal police investigation Pandora’s Box.  The scheme to siphon off public funds relied on tech companies to funnel bribes to allied lawmakers.

Then-governor José Roberto Arruda appears in one of the videos receiving packets of cash.  The videos were recorded by former Minister of Institutional Relations, Durval Barbosa, who in his capacity as defendant in 37 cases, turned state’s evidence. In his defense, Arruda said the funds received during the company were “properly registered and accounted for.” In the midst of the scandal, he left the Democrats political party.

Investigations in the case indicate that Arruda, aides, legislators and business figures may have engaged in criminal conspiracy, embezzlement, active and passive bribery, fraudulent auction of concessions, electoral irregularities and tax crimes

Accused of trying to bribe the journalist Edmilson Edson dos Santos, a witness in the  case, Arruda was remanded to preventive custody in February 2010, … and removed as state governor. He was imprisoned for two months and during that period was removed from office for losing his affiliation with the DEM party.